Do you think that production would be increased if overtime work was to be tax-free to employer and worker?.?

Question

No FICA, no Medicare and no Social Security taxes for work over 40 hrs/week.

charles jr: Your theory is good but that's not how it works in the real world. When my employees hit the 40hr mark, I send them home even though they would like to stay and make time and 1/2, taxes are a killer for small business.

Answer 1

No. When an employer pays an employee, the employee is taxed on the compensation, and the employer gets to reduce his income by deducting the compensation paid. If the overtime compensation was tax free to the employee (not subject to taxes), then the only amount the employer would save is the employer portion of social security and medicare, which really isn't much of a tax savings. It is the employee that would benefit the most. Also, there would be a disconnect between the taxable comp reported to the employee versus the deductible comp reported to the company. There are also other considerations, such as benefits that are tied to a person's salary, such as pensions. Would they be calculated based on just the taxable comp, or the total comp?

Finally, while production would go up because people would try to maximize the overtime to save on taxes, there would probably be a detrimental effect to the quality of the work when people are working too many hours. Also, you would be disenfranchising a large number of workers that are exempt employees and are paid a straight salary and do not receive overtime.

Answer 2

Yes I think that would be a help to employers. They always have to look at the bottom line. As for myself I get screwed on my taxes every year because of it so I would be willing to do it more if it doesn't cost me.

Answer 3

Maybe initially...but long-term - No, I don't think so....It could lead to abuses of the System.

Better to use Flat tax - say at 25% max.

More $ in our hands leads to a better Economy, lower unemployment, and so on.

Answer 4

I DO NOT KNOW WHAT KIND OF PRODUCTION YOU ARE TRYING TO ACCOMPLISH SO IT IS HARD TO SAY WITH ANY CERTAINTY EVEN WORKING OVERTIME WILL HELP YOU, HOWEVER YOU REALLY SHOULD NOT BE TRYING TO "STICK IT" TO YOUR EMPLOYEES, ANY BUSINESS WORTH THEIR SALT WILL INCREASE THE CAPACITY OF THEIR EQUIPMENT SO THAT NOT ONLY THEY CAN PRODUCE AT HIGHER LEVELS OCCASIONALLY (AS NEEDED), BUT ALSO TO IMPROVE BOTH EFFICIENCY AND OUTBOUND QUALITY QUOTIENTS,BOTH OBVIOUSLY WILL REDUCE RETURN COST AND LOWER COST OF OPERATION OF THE WHOLE OPERATION BY REDUCING OPERATING TIME, AND IMPROVE ORDER TURN AROUND TIME ! IN SHORT ITS BETTER TO HAVE IT AND NOT NEED IT THAN NEED IT AND NOT HAVE IT !!!!!!!!!!